Stories from the Great Recession

Please continue to help the blog grow.  Forward this to others who may be interested.  At the bottom of the article, you can find out how to sign up for the email service.




Today’s blog is light on “hard news” but I hope you might find it interesting.  The majority are stories that reflect some of the results of the great recession – four-day school weeks, increased coupon usage, difficult tax decisions for Los Angeles, etc.




Now on to what I read…

1. Some Results of the Great Recession

Four day work week. There are approximately 15,000+ school districts in the country.  More than 100 have moved to a four-day school week.  Obviously, this helps with budgetary shortfalls.  (Jenny homeschools two of our kids – maybe we should try this to solve our budgetary issues.)




Increased coupon usage. The number of coupons redeemed increased 27% from 2.6 billion to 3.3 billion in 2009.  This was the largest percentage increase in the 20 years the data has been collected.  CouponMom.com has 2.2 million members – up from one million in January 2009.




Everyone is feeling the recession. IBM’s Chairman and CEO saw his 2009 compensation drop by $200,000 to $24.3 million.  Hopefully someone will tell him about couponmom.com.




Junior liens (which sometimes make it difficult to work out a short sale on a house). There are $1.05 trillion of junior-lien home loans outstanding as of September 30^th.  Approximately 75% ($766.7 billion) are held by commercial banks.  Most of the rest is held by savings banks and credit unions.  Many of these loans are worthless due to the drop in home prices.




We have a deficit and we’re cutting taxes. Los Angeles has a $200MM budget shortfall that could cause layoffs (and supposedly) creates the risk of bankruptcy.  But last week, they cut taxes for internet companies.  These are tough issues.  Cities don’t want companies to leave.




Money flowing out of US stocks. In 2010, worldwide investors have pulled $15.3 billion from US stock funds (which includes ETFs).  Approximately $2 billion has gone into emerging market stocks.  Last year, $65 billion went into emerging market stocks and $20 billion in US bonds.




The Greek Prime Minister is pushing the US to investigate currency speculators who are driving down the value of the euro.  I think he learned this lesson from the US when we banned short selling during the financial crisis – implying that everything was the fault of the evil hedge funds.  I’m not sure why anyone would question the value of the euro when the EU controls monetary policy but not fiscal policy and they have countries that no one wants to lend to because people cheat on taxes and strike when there are austerity measures announced.  Those evil hedge funds…how dare they.




Greek tax and court officials, sanitation workers and local government workers are planning strikes this week. In a recent survey, 48% of Greeks disagree with labor unions’ stance (against the austerity measures) and 45% agree.




E. W. Scripps shares were off as much as 20% on Monday morning. Managers were given 1.8MM shares after they vested on Friday.  Apparently, they were all sitting by the computer on Monday morning hitting the sell button.  This is what happens when management goes a year without bonuses.




Woe is me! I was emailing back and forth with a good friend yesterday (both of us are 45) and we were talking about the fact that our generation hasn’t done great.  We’ve had no stock returns in the last ten years, no home price appreciation since 2003, job markets that are much more competitive than what our parents had, 401(k) plans instead of pensions and we pay more for our health care.  Of course, our kids are going to have it even worse.




2. Interesting Article from Paul Krugman

In Paul Krugman’s weekly NY Times piece, he wrote about a recent research paper that identified the common characteristics between Ireland and the US with respect to each country’s housing bubble and ensuing financial crisis.  The point of the paper and Krugman’s article is to say that we have attributed the problems (in the US) to many things (such as Fannie / Freddie, the Community Reinvestment Act and exotic financial instruments)…but these are things that they didn’t have in Ireland.




Apparently, the paper identified four common features between the US and Ireland:

1. irrational exuberance – the belief that high prices would go higher
2. cheap capital – China financed the US and Ireland was financed by the EU and especially Germany
3. players had the incentive to take risk (they did not bear the risk of loss)
4. regulatory imprudence

I have not read the research paper yet.  But here’s a link to Krugman’s article and that has a link to the paper.

http://www.nytimes.com/2010/03/08/opinion/08krugman.html?ref=opinion




3.  A Few Random Stories

I wish I had Cablevision as my cable provider! Disney blacked out ABC stations to Cablevision holders for a short while, saving them from having to watch the Academy Awards.  Who watches this crap?  Next time I get a teaching award, I’m going to start crying and thanking all the people who made it possible.  Why would we watch these freaking idiots?  I’m not sure, but if I only had two choices, I would consider watching skating over this.




Pretty brave people. Approximately 62.9% of eligible voters turned out in Iraq, despite bombs and various threats.  As a reference point, in the 2008 election in the US, 61.7% of eligible voters turned out (although 64% of people claimed they voted when asked by the Census bureau!).




Placement firm Challenger, Gray and Christmas says that the first week of the NCAA tournament may cost US employers as much as $1.8 billion in unproductive wages. The math is based on $18.70 hourly wage with 58.3 million people watching games and filling in pools.  Each 20 minutes cost $362.2 million.  Using this math, there’s no telling how much money Tiger Woods cost corporate America.  In reality, how much do most people goof off on a typical day…

______________________________

If you want to be on my email list:

1.  go to www.leedsonfinance.com

2. toward the top right corner is a place to click on for email service — click and enter your email address
3. you will receive an email which will require you to click on a link to confirm that you want to be on the list

IMPORTANT: if you don’t receive the email in step 3 or you don’t click on the link, you won’t be on the list.  Sometimes, people who use corporate emails get blocked (it’s probably 50% of the time).  So if you don’t get the email, you know you need to use a personal email.